Value Added Tax Consolidation Act 2010 section 97

Option to tax letting of immovable goods

Section 97 allows a landlord to opt to charge VAT on the letting of commercial property, and sets out the rules for exercising, restricting, and terminating that option, including connected persons rules and a prohibition on opting to tax residential lettings.

• A landlord may opt to charge VAT on a commercial letting by including a taxability provision in the letting agreement or by issuing a written notification to the tenant; the option is letting-specific and makes the landlord an accountable person for VAT purposes.
• The option is terminated by written agreement with the tenant, by the landlord and tenant becoming connected persons, by a connected person occupying the property, by the property being used for residential purposes, or by the landlord failing to confirm the option in writing after having claimed input VAT on acquisition or development.
• A landlord may not opt to tax a letting where the landlord and tenant are connected persons, or where the landlord or a connected person occupies the property, unless the tenant or occupant is entitled to deduct at least 90 per cent of the VAT chargeable on the rent.
• A landlord may not opt to tax a letting of residential property, and any existing option to tax automatically ceases if the property comes to be used for residential purposes.

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